By Connor Lynch
SIMCOE — The biggest buyer of Ontario’s ginseng may be in financial trouble, but that’s not panicking growers in the province, even though some of them aren’t getting paid.
The chair of the Ontario Ginseng Grower’s Association, Carl Atkinson, said that despite the financial troubles of Hong Kong-based Hang Fat, the market for ginseng hasn’t evaporated.
Hang Fat ran into trouble this year when a sell-off in January knocked off over 90 per cent of the company’s listed value, and things went from bad to worse in February when it was revealed that the brothers who co-founded the company had used company shares and capital for personal financing.
Atkinson called Hang Fat’s trouble an internal problem for the company, not a market problem. “We just had to bide our time.”
Hang Fat is the single largest buyer for Ontario’s ginseng, buying more than 50 per cent of about 6,000 acres grown by about 150 farmers in the province, largely in Norfolk County, said Atkinson.
Norfolk hogs the ginseng for a simple reason. Glaciers that once ground down the land in the area left behind sand plains, and ginseng needs that well-drained soil.
But market conditions for the crop move at anything but a glacial pace. “This industry is very up and down, very unstable,” but Atkinson said that demand for ginseng is still strong, largely in southeast Asia.
Ginseng growers are also familiar with taking the long view. The crop is a perennial, and can take as much as four years before it’s ready to be harvested. High input costs (as much as $50,000 an acre), a long delay before you reap the rewards, and market instability keep the number of growers low.
“Nothing about it is easy,” said Atkinson.
But those 6,000 acres pay off to the tune of as much as $300 million a year, said Atkinson. That is, if growers are getting paid.
Peter VanBerlo, a ginseng grower in Simcoe with 75 acres, said he figured as many as a third of Ontario’s growers might not have gotten paid. And there’s trouble for growers who had to hang on to product.
“The Chinese buyers smell blood. They don’t know what to pay, so they aren’t doing anything.”
VanBerlo doesn’t sell to Hang Fat, but he is stuck hanging on to 41,000 lb. of product he doesn’t know if he can sell because right now, nobody’s buying.
“There’s the odd yahoo small guy who comes along and says he’ll buy it for a third of the price because you’re desperate.” But VanBerlo’s hanging on to his ginseng, because “this has nothing to do with the marketplace. This is a political problem.”
Even if Hang Fat’s slimming stock value leaves some growers less than optimistic about a recovery, getting out is just as hard as getting in. “You have to plan your exit,” said Atkinson.
Ginseng and cash crop grower A.R. Kennedy, who has 30 acres of ginseng in La Salette, a half hour southwest of Brantford, doesn’t sell to Hang Fat but doesn’t think he’s going to avoid the fallout. “That’s gonna have a big impact on the industry.”
Kennedy has diversified into a variety of crops to get through the rough times with ginseng. Last year wasn’t one of them; prices last fall were strong, fetching as much as $50 to $60 per lb.
Ginseng is sold in the fall, so there are no 2016 prices yet.